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Equity Mutual Fund Investors: Know About All 10 New Categories


The mutual funds in India are undergoing a phenomenal change in respect of scheme merger, re-naming, change in attribute etc to comply with the SEBI norms. In the debt space there are 16 new categories of funds whereas equity schemes have in total 10 distinct categories. In the list, some previous categories have been retained with some tweak while few are newly added.

Equity Mutual Fund Investors: Know About All 10 New Categories

Here's the complete list of new equity fund categories with their asset allocation plan:

1. Large Cap Funds: Invest in large cap stocks or large-sized companies so less risky in comparison to mid or small cap fund. Also the exposure in large cap stocks has to be minimum 80% of the scheme's assets. Investors over a period of time can expect decent returns from such schemes.

2. Multi Cap Funds: The scheme category will continue its investments across large, small and mid cap companies. Minimum 65% of the total asset base has to be divested in stocks.

3. Large and Mid Cap Funds: This is the novel category introduced by the SEBI which will invest both in mid and large cap company stocks. The mandate to invest a minimum of 35% each in mid and large cap stocks is given.

4. Mid Cap funds: A total of 65% of the scheme's assets will be invested in mid-cap stocks. Risk factor in such schemes is high in comparison to large cap funds.

5. Small Cap Funds: A minimum of 65% exposure of the scheme's assets is to be taken in small cap stocks which are highly risky but at the same time can offer huge gains to the investor.

6. Dividend Yield Funds: This is a new category of funds introduced which will invest in dividend yielding stocks or stocks that pay dividend on a periodic basis.

7. Focused Funds: The scheme while underlining its focus area such as the mid, small, large or multi-cap will invest in maximum 30 stocks.


8. ELSS: Equity linked saving schemes is a tax saving mutual fund category with a lock-in of 3 years. A minimum of 80% has to be invested in equities of the total scheme assets.

9. Contra Funds: Taking the contrarian view, the minimum of 65% of total assets of the scheme are to be put towards equity class.

10. Value Funds: The scheme under the category will adhere to the value based investing and will have minimum 65% allocation in equities.

Story first published: Tuesday, April 10, 2018, 17:09 [IST]
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